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The National Energy Strategy And District Energy/CHP
The National Energy Strategy unveiled by President
Bush is aimed at helping to encourage additional district
energy and combined heat and power development. The Strategy's
focus on these technologies is a major boost to the industry
and to the mission of International
District Energy Association.
As
part of the unveiling of his National
Energy Strategy, President Bush toured District
Energy St. Paul Inc. to view the company’s district
energy plant. This visit helped to focus increased national
and internation attention on the many economic, efficiency
and environmental benefits that district energy and combined
heat and power technologies provide. Click
here to learn more about President Bush's visit to the
District Energy St. Paul facility.
The
President's plan prominently features combined
heat and power (CHP) and represents a major endorsement
for the removal of regulatory and market barriers that have
inhibited wider implementation of this technology.
Combined Heat and Power
In
the report, CHP is positioned in a very positive light. Key
points include:
- CHP
is environmentally preferred, cost effective, efficient,
and reliable.
- CHP
is defined as part of the distributed energy group of technologies
that can reduced transmission and distribution (T&D)
losses and defer the need to construct expensive new T&D
assets. Distributed energy technologies also include: stationary
fuel cells, landfill methane, small-scale wind, and photovoltaics.
- Location
of CHP at or near the end-use site allows for use of waste
heat and waste-fuels.
- Barriers
to CHP are identified as:
- Delay
and difficulties obtaining air permits, including lack
of recognition of CHP air quality benefits.
- Difficulties
in siting due to local ordinances.
- Lack
of standards governing utility interconnection.
- Inequitable
tax treatment.
Regarding
barriers, the report states:
"New
combined heat and power facilities may face air permitting
hurdles when they replace marginally dirty boilers. The
Clean Air Act does not recognize the pollution prevention
benefits of the increased efficiency of combined heat and
power units. At the same time, these combined heat and power
investments are taxed at the industry's tax rate, not at
the rate they would receive if they were considered part
of the utility sector for tax purposes. In the last few
years, surging venture capital investments showed strong
support for distributed energy technologies."
The
report includes a case study of IDEA member District Energy
St. Paul.
Policy Recommendations
The
"National Energy Policy" report made significant
policy recommendations for CHP:
- The
NEPD Group recommends that the President direct the Secretary
of the Treasury to work with Congress to encourage increased
energy efficiency through combined heat and power (CHP)
projects by shortening the depreciation life for CHP projects
or providing an investment tax credit.
- The
NEPD Group recommends that the President direct the Administrator
of the Environmental Protection Agency to issue guidance
to encourage the development of well-designed CHP units
that are both highly efficient and have low emissions. The
goal of this guidance would be to shorten the time needed
to obtain each permit, provide certainty to industry by
ensuring consistent implementation across the country, and
encourage the use of these cleaner, more efficient technologies.
- he
NEPD Group recommends that the President direct the Administrator
of the Environmental Protection Agency to work with local
and state governments to promote the use of well-designed
CHP and other clean power generation at brownfield sites,
consistent with the local communities' interests.
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Click
here